Two days ago, Bloomberg reported that gold is heading for its best quarter in a year. More and more investors have been buying gold for its safe haven qualities... and as a way to profit from the falling dollar.
And given that the US government seems intent on debasing the dollar with its massive "money printing" programme, that bodes well for the yellow metal.
You can see it in today’s chart. It shows the five year performance of spot gold prices (red line) versus the Dollar Index (blue line). The Dollar Index tracks the currency against six major currencies, including the sterling, euro and Japanese yen. As you can see, broadly speaking, when the dollar declines, gold prices rise, and vice-versa.
The dollar dilemma is the main reason for gold’s popularity
As investor momentum gathers pace against the dollar, we’ll see an even larger move into the safe-haven commodity that is gold.
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